The growth of multi-employer pension plans in Canada's broader public sector makes better reporting of their costs and promised benefits by employers and governments desirable. More transparency on ...the part of many employers, such as school boards and municipalities would help. So would more clarity from provinces, whose financial statements often imply responsibility for pension obligations that they do not, and should not, bear.
Daniel Schwanen Vice President, Research The Study in Brief The Canadian Institute for Health Information's annual National Health Expenditure (NHEX) is a vital source of data on how much Canadians ...and their governments are spending on healthcare generally, as well as on specific categories. Because the NHEX reports give both preliminary numbers based on government projections and revised numbers for past years based on actual spending, they also shed light on governments' ability to hit their healthcare spending targets. During the 2014-2018 period, which featured the historically typical average 0.9 percent annual overshoot across the country, the majority of jurisdictions undershot their public health budgets, six undershot their hospital budgets, five undershot their budgets for other institutions and for administration, and four undershot their budgets for physicians and for drugs. Along with illuminating detail on public and private sector spending on various institutions and services related to healthcare, the NHEX reports have a feature that sheds light on governments' ability to hit their healthcare spending targets. Reports covering the 2014-2018 period - a time when healthcare spending growth accelerated again, after a 2011-to-2013 reassuring series of spending increases lower than Canada's potential economic growth rate.
Daniel Schivanen Vice President, Research Commentary No. 647 November 2023 $12.00 isbn 978-1-77881-011-4 ISSN 0824-8001 (print); ISSN 1703-0765 (online) working harder for less: more people but less ...capital is no Recipe for Prosperity o Business investment in Canada has been so weak since 2015 that capital per worker has been falling - part of an ominous pattern of stagnating productivity and living standards. o A longstanding gap between investment per available worker in Canada compared to the United States and other OECD countries narrowed from the late 1990s through the early 2010s, but has since widened to a chasm. To the extent that capital and labour are complementary factors of production, a faster-growing workforce ought to induce businesses spurred by opportunities and competitive pressure to invest more than they would otherwise. ...capital and labour are also substitutes. Different products and modes of production use labour and capital more or less intensively, and as countries trade with each other, capital-intensive countries are likelier to specialize in capital-intensive goods and services, and labour-intensive countries are likelier to specialize in labour-intensive goods and services. Since living standards are higher in capital-intensive countries, we worry about the possibility that low business investment and fast workforce growth are leading Canada down a labour-intensive path. The correlation between capital stock per member of the labour force3 - for which we use the term "available worker" - and output per available worker across countries is clear (Figure 2).4 The fact that capital formation is both a result of productivity growth and a driver of it makes recent trends in Canada's capital stock troubling.
Comparisons of that limited information show major differences among governments' spending on healthcare and other programs, including health spending unrelated to the pandemic, that are hard to ...explain with reference to COVID's health or economic impacts. * Although many provinces and territories finished 2020/21 with surprisingly strong revenues and bottom lines, the debt-financed federal spending that supported them is winding down. ...an investigation of its impact on public finances highlights problems with the timeliness, fullness and reliability of the information Canada's senior governments give their legislatures and the public - in general, and in times of crisis particularly. The net effect of much higher expenses and little change in revenues was a $368 billion increase in their accumulated deficits - the measure of debt (including capital assets) that is the standard measure of fiscal capacity in Canadian public sector accounting standards. ...analyses are all the more desirable when a crisis has pushed results as far off track as COVID did, yet most governments provided little systematic information on how the pandemic affected overall revenue, expense and surpluses or deficits, or even how it affected key programs. Because health-related expenses are a natural focus of our investigation, we reference compilations from Statistics Canada and the Canadian Institute for Health Information (CIHI) for potential insights into why COVID affected various governments differently.
While weakness in the natural resource industries explains some of Canada's disappointing performance, much of that weakness is attributable to policy dysfunctions that governments can and should ...fix. ...Canada's lacklustre performance is evident in investment categories that have suffered less directly from the resource sector's weak prices and market-access problems. Not all OECD countries break business investment down cy type the way Canada and the US do, and not all measure IPP the same way, so we must use aggregate business investment with less confidence chct we are measuring like with like. ...no category-specific measures of relative prices like those available for Canada and the US exist, so the bang-per-buck adjustment is less precise: an alternative is to use PPP exchange rates, benchmarked to relative prices of investment goods in 2008. ...it was up 60 percentage points since early 2017 - a far worse heightening of anxiety than the 9-percentage-point increase worldwide and in the advanced economies generally. Since Canada appears for at least some time to be exposed to protectionist US moves, it makes all the more sense to pursue liberalization with other like-minded partners and follow up recent successes, such as the Canada-EU Trade Agreement and the Trans-Pacific Partnership, with other tradepromotion initiatives. ...more opportunities to invest in Canadian infrastructure could attract Canadian institutional investors, particularly pension funds, which currently look abroad for assets that match their long-term liabilities (Dachis 2017).
Tax rules requiring RRIF withdrawals need revamping. Longer lives and lower returns increase the likelihood that mandatory minimum withdrawals will leave seniors with negligible income from their ...tax-deferred saving in their later years.Government impatience for revenue should not force holders of RRIFs and similar tax-deferred vehicles to deplete their nest eggs prematurely. We need to ensure that minimum withdrawals and the ages at which saving must stop and withdrawals must start reflect updated demographic and economic realities.The complexities of formula-based approaches and frequent updates suggest more far-reaching approaches, including abolishing age limits and minimum withdrawals altogether. Another withdrawal-reform option would eliminate the requirement to withdraw amounts below a certain threshold value - say $8,500 - to avoid premature depletion of nest eggs.
The budgets governments present around the beginning of their fiscal year and the financial statements they publish after the fiscal year has ended are critical tools for legislators and voters. To ...non-experts, the transparency of these documents matters: from them, readers should be able to understand the government's plans, see how results differed from plans, discern the implications for the government's future capacity to deliver services, and hold the government accountable for its performance. This annual report assesses the transparency and quality of the budgets and financial statements of 32 major Canadian municipalities.The grades for 2022 ranged from A to D-. At the top was Richmond, British Columbia, whose documents earned an A for their clarity, completeness and promptness. Markham, Surrey, Vancouver and Quebec City, each with A-, also stood out favourably. The financial statements these municipalities published after fiscal year-end were typically clear. The statements followed public sector accounting standards (PSAS) and presented the key figures where users could find and identify them easily. Although some municipalities released their financial statements late and the documents have features that impede understanding, their statements generally earned high scores.The budgets of many other municipalities were less satisfactory. At the bottom were Durham Region, Kitchener, London, Hamilton, Regina and Halifax, whose D-range grades reflect multiple problems with transparency, reliability and timeliness. Most municipalities did not present PSAS-consistent figures prominently and many did not present them at all. Most presented separate operating and capital budgets, with the latter prepared on a cash basis. Even experts struggle to reconcile such budgets with past results or to predict what the municipality will report at year-end. Many budgets also separated tax- and rate- supported activities, presenting a fragmented picture. Municipal councillors often voted on budgets after the fiscal year started and money was already committed or spent.These problems matter. Opaque budgets foster citizens' disengagement and discourage informed input. In fact, Canada's municipalities are in more robust financial shape than most people know. Cash budgeting for capital likely helps explain why some cities collect funds up front for projects that might proceed late, if ever; it also fosters neglect of infrastructure once in place.A municipality's budget should follow the same accounting rules and format as its year-end financial statements. In particular, the budget should use accrual accounting with respect to capital, showing long-lived items such as buildings and bridges as assets that get written off as they deliver their services. Provincial governments that impede PSAS-consistent municipal budgets - for example, by mandating separate operating and capital budgets - should stop doing so. With PSAS-consistent accounting, the municipality's budget, like its financial statements, would show city-wide consolidated gross revenue and spending, capturing the full scope of the city's activities and claim on its citizens' resources. Along with timelier presentations, these changes would raise the fiscal accountability of Canada's municipalities to a level more commensurate with their importance.
Institute staff members are subject to a strict conflict of interest policy. The federal government, which earned a grade of F in last year's report card, mainly because of its egregious and ...unprecedented failure to produce a budget, was slow to release its public accounts because it reopened the books - another worrying precedent from a government that should be setting the standard for transparent, reliable and timely financial information. Massive increases in spending and borrowing by governments in response to the COVID-19 crisis, and ambitions for new social programs and industrial policies in its aftermath, have raised the stakes - and, unfortunately, coincided with some serious backsliding in the transparency and timeliness of financial information. The difference between their assets and liabilities - their net worth - reflects their accumulated surpluses and deficits over time and captures their capacity to provide services now and in the future.
